For anyone who likes to trade less expensive stocks, here’s an interesting one. Nxt-ID (NASDAQ:NXTD) provides technology products and services for health-care applications, and NXTD stock should be affordable for most investors.
I don’t mean to make the company sound more diversified than it actually is. Nxt-ID’s business mainly revolves around personal emergency response systems, which are sold through Nxt-ID’s subsidiary, LogicMark.
Meanwhile, the company seems to have firmed up its capital position somewhat, and I’ll provide details about that below
On the other hand, there may be concerns about the share price and the possibility of the stock being delisted. First, though, it’s important to provide an account of the shares’ recent price movements.
A Closer Look at NXTD Stock
The first thing to know is that NXTD stock can be classified as a penny stock, which is defined by the U.S. Securities and Exchange Commission (SEC) as a stock that trades under $5 per share.
Penny stocks can be volatile, so I do not recommend making this stock a large portion of your portfolio. A small position might be appropriate, though.
For much of 2020, NXTD stock traded under 50 cents per share. It rebounded in December, however, and the stock ended the year at around $1.60.
In 2021, February and March ended up giving Nxt-ID’s shareholders a wild roller-coaster ride. It was a real pop-and-drop scenario as the stock rallied to a 52-week high of $3.44 on Feb. 17, only to fall back to $1.32 by March 4.
Yesterday NXTD stock closed at $1.38. Could another quick pop be right around the corner? Maybe, but caution is advised as there’s another possibility that prospective investors should be aware of.
The De-listing Threat
When a stock is listed on a well-regarded exchange such as the Nasdaq, typically it would be bad news for its shareholders if the stock was de-listed.
NXTD stock is currently listed on the Nasdaq, but there’s no guarantee that it will always stay there.
Nasdaq has a rule called Listing Rule 5550(a)(2), which requires securities listed on the exchange to maintain a minimum bid price of $1 per share.
As revealed in a Securities and Exchange Commission (SEC) filing, Nasdaq notified Nxt-ID that, “based on the previous 30 consecutive business days, the Company’s listed security no longer met the minimum $1 bid price per share requirement.”
Without a doubt, the company’s shareholders must have been relieved to learn that on Jan. 4, 2021, Nxt-ID received confirmation from Nasdaq that the company had regained compliance with Nasdaq’s bid-price requirement and that “the matter is now closed.”
And so, the de-listing threat is in the rear-view mirror, but, given the company’s current share price, it may not stay there permanently.
Some Good News
In other words, it’s possible that the share price could fall below $1 again, triggering another de-listing warning from Nasdaq.
To balance this out, I’d like to offer up some good news. Namely, Nxt-ID reportedly improved its capital position by significantly reducing its debt.
More specifically, Nxt-ID made a prepayment of roughly $5 million on the principal of the company’s senior secured debt.
With that, Nxt-ID reduced the outstanding principal amount of the debt to around $5.7 million. That’s not exactly cutting the principal in half, but it’s fairly close.
Nxt-ID CEO Vincent S. Miceli asserted that this debt reduction would save his company around $700,000 of interest costs annually. So the prepayment should further bolster Nxt-ID’s overall capital position.
The Bottom Line
I purposely presented a mix of good and less-than-good news in order to provide a balanced outlook of Nxt-ID.
What’s undeniable is that NXTD stock is a fast mover in both directions. As a result, caution is the most appropriate tone when considering an investment in this stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.